Steem Versus Hive: Testing Blockchain Governance

This case examines a pivotal governance conflict that occurred in 2020 when Justin Sun, founder of the TRON blockchain, acquired Steemit Inc., the company behind a popular social media platform operating on the Steem blockchain. Steem, launched in 2016 by Daniel Larimer and Ned Scott, operated as a delegated proof of stake (DPoS) blockchain where community members voted for "witnesses" who maintained the network. The Steemit community was proud of its decentralized values, where no single entity was in control. When Sun acquired Steemit, he gained access to a significant number of tokens, potentially giving him outsized influence over blockchain governance. Concerned about centralization of power, the Steem community implemented a "soft fork" to temporarily freeze these tokens, but Sun leveraged relationships with major cryptocurrency exchanges to effectively take control of the blockchain. In the eyes of the Steemit community, Sun’s actions were tantamount to a hostile takeover of the blockchain. In response, community members executed a "hard fork," creating a duplicate blockchain of Steem, called Hive—a new network that maintained the original community values while excluding Sun's tokens from the token distribution. The case explores the aftermath of this split and raises questions about blockchain governance, community values, and mechanisms to protect decentralized systems from potential takeovers.